Freeport-McMoRan Copper & Gold

Freeport-McMoRan Copper & Gold Inc. (Freeport) is a large international mining company, headquartered in Phoenix, Arizona. Freeport operates globally, mining largely copper, gold, and molybdenum; it is the largest single producer of molybdenum in the world. Freeport operates the Grasberg mine in Indonesia (the largest gold mine and the third largest copper mine in the world) and has mining operations in the Democratic Republic of the Congo, Arizona, New Mexico, Colorado, Peru, and Chile. Freeport also has rod and refining operations and copper production facilities in Texas, Connecticut, Illinois, Arizona, and New Jersey, as well as molybdenum conversion plants in Arizona, Iowa, and the Netherlands.

Freeport’s estimated reserves “include 93.2 billion pounds of copper, 41.0 million ounces of gold, 2.0 billion pounds of molybdenum, 230.9 million ounces of silver and 0.6 billion pounds of cobalt.” Freeport’s development of the Tenke Fungurume deposit in the DRC is estimated to be the largest undeveloped copper/cobalt lode in the world.

Political and public influence
Freeport-McMoRan spent $420,000 on lobbying in 2007, largely to the firms Jones, Walker and Johnston & Associates. Freeport also has an official political action committee, Freeport-McMoRan Copper & Gold Inc. Citizenship Committee, which contributed $172,500 to federal candidates in the 2008 election cycle; 39% to Democratic candidates and 61% to Republican candidates.

Labor and human rights
One of Freeport’s largest assets, the Grasberg mine in Papua New Guinea, Indonesia, has also proven to be one of its largest reputational liabilities. Indonesia was ruled by Gen. Suharto’s brutal military dictatorship for over three decades, during which the government became known for repression and gross abuse of human rights. Freeport, however, developed a close relationship with the regime to secure its position in Indonesia. Through investigative reporting and Freeport’s own confessions to the Securities & Exchange Commission, millions of dollars of payments to the Indonesian military, paramilitary, and police units and officials, as well as direct payments for vacations and college educations for family members of individual commanders, have been reported. In its annual report, filed in March 2003, Freeport stated: "PT Freeport Indonesia's share of support costs for the government-provided security, involving over 2,000 government security personnel for the operations, was $5.6 millionfor 2002 and $4.7 million for 2001. This supplemental support consists of various infrastructure and other costs, such as food and dining hall costs, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs, and community assistance programs conducted by the military/police. PT Freeport Indonesia’s capital costs for associated infrastructure was $0.4 million for 2002 and $0.5 million for 2001. In addition, over a period of several years prior to 2001, we constructed and provided infrastructure for housing, offices and related facilities at a cost of approximately $35 million".

As recently as 2008, Freeport admitted it had paid around "1.6 million dollars through wire transfers and cheques ... to provide a 'monthly allowance' to police and soldiers at and around the Grasberg mine," reported the Agence France-Presse. The payments were made "in contravention of a series of legal measures aimed at stopping military units working as paid protection." The $1.6 million in direct payments were part of $8 million that "Freeport paid in broader 'support costs' for 1,850 police and soldiers protecting Grasberg last year, according to a company report filed with the US Securities and Exchange Commission."

Reports have also found that mine security and Indonesian military and police forces have been responsible for deaths, torture, and disappearances of locals as well as foreigners. The Australian Council on Overseas Aid found that in 1994 and 1995, the military and mine security were responsible for 22 civilian deaths and disappearances and 15 deaths and disappearances of those determined by the Indonesian government to be guerrillas. This pattern of violence has been continuously documented, with one of the most high-profile sets of deaths being the killing by the Indonesian military of two American schoolteachers and a Papuan in 2002 on a Freeport mine road, after which the U.S. Congress cut military aid to Indonesia and questions were increasingly raised regarding the relationship between Freeport and the Indonesian military. After the killing of three traditional gold miners in 2006, despite information tracing these deaths to the Indonesian military, twelve Papuans, including a respected pastor, were arrested by the FBI and the Indonesian police on the pretense that they were being taken to the U.S. to denounce violence by the Indonesian military and taken in a Freeport boxcar to prison.

Protesters have expressed anti-Freeport sentiment over its tenure in Indonesia, with perhaps one of the strongest rebukes being in 1996, when rioters shut down the mine for three days and millions of dollars of equipment were destroyed. A 2006 protest, in which students attacked Freeport offices in Jakarta, also shut down the company’s mine in Papua after locals, armed with bows and arrows, created barricades and demanded to be permitted to sift through the mine’s waste after violent clashes with police and company security who attempted to prevent them from sifting. Earlier protests of the installation of the mine and the resulting takings of tribal and community lands were brutally suppressed by the dictatorship, at times with Freeport financial support, with reports of anywhere from 900 to thousands of deaths. Students and other activists and locals protesting the Freeport mine have also been pursued, arrested, attacked, and tortured.

Suits have also been filed against Freeport in U.S. federal court and Louisiana state court, alleging that Freeport was guilty of human rights abuses. The federal case, filed by Tom Beanal, a leader of the Amungme people of West Papua, alleges that Freeport cooperated with the Indonesian military in committing human rights abuses against him such as torture, surveillance, and detention, as well as degradation to the environment and land of the Amungme people. The state case claims similar environmental and human rights abuses. The Fifth Circuit and the Louisiana state courts dismissed the cases. Tom Beanal was later placed on the board of Freeport Indonesia, Freeport’s subsidiary operating the Grasberg mine.

While human rights groups have presented concerns that Freeport’s investments in the Tenke Fungurume deposits in the Congo raise similar human rights issues, given the security and human rights record in the area, the U.S. government’s Overseas Private Investment Corporation recently approved risk insurance for the venture.

While relations between Freeport and the Indonesian military have dominated the labor and human rights record of the company, other labor issues have also occurred at Freeport mines and other operations. In 2003, the Grasberg mine was closed after a landslide killed workers. In November 2008, Freeport fired 691 North American mine workers, from Arizona to Colorado to New Mexico, in order to reduce costs and delay expansions.

Environment
Unlike in Freeport’s Congolese venture, the Overseas Private Investment Corporation deemed the Freeport Grasberg mine in Indonesia unfit to insure, revoking Freeport’s insurance policy in October 1995. This was the first time that OPIC had ever revoked risk insurance for a U.S. company due to environmental or human rights concerns. OPIC officials cited extreme environmental concerns, including large amounts of waste that Freeport had dumped into Papuan rivers at levels that would be illegal in the United States. The Indonesian Environment Ministry provided previously undisclosed documents to The New York Times regarding environmental contamination around the mine, including a 2002 study by the American consulting company Parametrix (funded by Freeport) identifying the rivers and wetlands affected by Freeport waste as “unsuitable for aquatic life.” Reports indicate that the tailings from the mine, which contain heavy metals such as mercury, cadmium, selenium, copper, and others, have been dumped into local rivers (at a volume estimated by some to equal approximately 650 million metric tons) and are now flowing into the Arafura Sea.

The Norwegian Sovereign Wealth Fund determined in 2006 to blacklist Freeport from its investments, given that “continued investment in the company was deemed to entail an unacceptable risk of contributing to severe environmental damage,” according to the Norwegian Ministry of Finance.

Freeport has also found itself the object of criticism for environmental practices in the United States, with local environmentalists denouncing Freeport’s release of radioactive gypsum waste into the Mississippi River.

Anti-trust and tax practices
Freeport merged with the mining giant Phelps Dodge Corp. in 2006, raising possible red antitrust flags, but this merger was successfully approved by U.S. antitrust regulators.

Social responsibility initiatives
After the 1996 riots in Indonesia, Freeport began to increase its development projects in Papua, contributing 1% of its annual revenues to a fund which would contribute to medical services, roads, and schools. Its projects included two hospitals, a clinic, health programs for malaria and AIDS, and a fund to compensate locals with shares in the company for the lands Freeport was using. The International Center for Corporate Accountability, while finding significant corruption in the management of these funds and other violations of Indonesian law in a report on Freeport in Indonesia, also commended the company for opening its practices to evaluation by the Center.

Freeport published its corporate sustainability report in 2007, A World of Commitments: Working Toward Sustainable Development 2007, which describes the social and environmental sustainability initiatives undertaken by the company and is designed to complement the reporting the company conducts under the Global Reporting Initiative. This report is available at http://www.fcx.com/envir/index.htm.

Business scope
Freeport is ranked 140th on the 2008 Fortune 500 list, and brought in revenues of $17.9 billion in 2008, a 209% increase from 2006. Its 1997-2007 annual growth rate was 21.6%. See http://www.fcx.com/company/who.htm to review Freeport-McMoran’s 2007 Annual Report and other financial information provided by the company.

Governance
Directors Accessed January 2009:


 * James R. Moffett
 * Richard C. Adkerson
 * Robert J. Allison, Jr.
 * Robert A. Day
 * Gerald J. Ford
 * H. Devon Graham Jr.
 * J. Bennett Johnston
 * Charles C. Krulak
 * Bobby Lee Lackey
 * Jon C. Madonna
 * Dustan E. McCoy
 * Gabrielle K. McDonald
 * B.M. Rankin, Jr.
 * J. Stapleton Roy
 * Stephen H. Siegele
 * J. Taylor Wharton

Freeport’s Management includes the following individuals; full bios are available on the Freeport website:

Chairman: James R. Moffett President and CEO: Richard C. Adkerson Executive Vice President, CFO, and Treasurer: Kathleen L. Quirk Executive Vice President and CAO: Michael J. Arnold

Contact information
Freeport can be contacted as follows:

Headquarters One North Central Ave. Phoenix, AZ 85004 +1 602.366.8100 fcx_communications AT fmi.com

New Orleans Administrative Office 1615 Poydras St. New Orleans, LA 70112 +1 504.582.4000

Investor Relations David Joint, Manager, Investor Relations +1 504.582.4203 ir AT fmi.com

Media Relations Bill Collier, Vice President Communications +1 504.582.1750 fms_communications AT fmi.com

Eric Kinneberg, Director-External Communications +1 602.366.7994 fcx_communications AT fmi.com

Global Supply Chain +1 602.366.8461

Customer Service Group Rod: +1 602.366.8417 Electrode & Bare Wire: +1 602.366.7855 Copper Sulfate & Magnetite: +1 602.366.7855

Community Relations +1 602.366.8050 or +1 800.528.1182 extension 8050, or community_affairs AT fmi.com.

E-mail proposals to: community_affairs AT fmi.com or mail to:

Freeport-McMoRan Copper & Gold Community Relations Department/Foundation One North Central Ave. Phoenix, AZ 85004

Related SourceWatch articles

 * Indonesia
 * W. Russell King
 * Lundin Mining
 * Victor A. Tanaka

External resources

 * http://www.papuaweb.org/bib/abib/freeport.htm
 * Leith, Denise. The Politics of Power: Freeport in Suharto's Indonesia. Honolulu: University of Hawaii Press, 2003

External articles

 * "Freeport McMoRan's Corporate Profile" Project Underground, May 19th, 1997. (This article is hosted on the CorpWatch website).
 * Global Witness, 2005, Paying for Protection: The Freeport mine and the Indonesian security forces. Global Witness, July 2005. Washington. 35p.
 * Denise Leith 2003. The Politics of Power: Freeport in Suharto's Indonesia. University of Hawaii Press, Honolulu.
 * Freeport-McMoRan Copper and Gold Inc, "Annual Report 2002", US Securities and Exchange Commission, page 20.
 * Jane Perlez and Raymond Bonner, "The Cost of Gold | The Hidden Payroll: Below a Mountain of Wealth, a River of Waste", New York Times, December 27, 2005.
 * "Indonesian Military Admits to Taking Money U.S. Company", New York Times, December 29, 2005. (This is an Assoiciated Press story).
 * Tb. Arie Rukmantara, "Government warns Freeport to stop polluting river", The Jakarta Post, January 01, 2006.
 * Richard C. Adkerson, "Letter to New York Times", Freeport McMoRan, January 11, 2006.
 * "Second Mining Company Blasts NY Times Over Reports", New York Times, January 18, 2006.
 * Katharine Q. Seelye, "Mining Company Says U.S. Studies Payments to Indonesia's Military", New York Times, January 19, 2006.
 * Raymond Bonner and Jane Perlez, "New York Urges U.S. Inquiry in Mining Company's Indonesia Payment", New York Times, January 28, 2006.